Financing A New Or Used Boat? Here’s What You Need To Know


For some people, owning a boat is a dream come true. If you’re in this category, maybe you’ve spent a lot of time on the water. Perhaps you haven’t had a lot of firsthand experience living an aquatic lifestyle, but it’s something that interests you.

Either way, you should know about boat loans if you want to get a watercraft. We’ll talk about financing a new or used boat in the following article.

What is Financing?

In this context, the term “financing” means you’re procuring money to purchase a new or used boat. If you’re financing a boat, you’re not paying for it with cash upfront.

You can finance a boat in the same way you can do it for many other purchases, such as cars, furniture, etc. When you’re pursuing financing options, you’re trying to reach an agreement with the entity selling the commodity.

Financing Directly with the Seller

If you’re trying to finance a new or used boat, there are two ways to do it. The first way is to agree on a payment plan directly with the entity selling the boat. There are boat dealers, just as there are car dealers.

If you’re buying a boat directly from someone who owns it instead of from a dealer, they probably won’t accept financing. They’ll likely want to make a cash deal. If you’re interested in financing, it’s recommended to search for yachts for sale through a dealer since it is the most effective method to secure financing for your purchase.

Usually, arranging financing through the boat’s seller is pretty easy. That way, you don’t need to involve any third parties. A boat dealership has presumably gone through the financing process before, so they should have the paperwork ready.

Financing Through a Different Lending Entity

You might also get financing to purchase a new or used boat through a different lending entity, like a bank or credit union. You likely won’t find a personal loan specifically called a “boat loan.” What you’re looking for is a personal loan with favorable interest rates.

Whether you go through the boat dealership or another lending entity, they’ll probably want to look at your credit rating before they offer you financing. Also, like with other major purchases, it’s more probable they’ll approve you for financing if you can put at least some money down.

Fixed or Adjustable-Rate Loans

The other factor to keep in mind if you’re securing financing for a boat is whether you’re getting a fixed-rate loan or an adjustable one. A fixed-rate loan will almost always be the better choice.

With a fixed-rate loan, you’re locking in the rate and time you have to pay it off. You can take that into account when you look at your monthly expenses.

With an adjustable-rate loan, you usually pay less at the beginning of the loan period, but then that rate goes up after a certain time elapses. Be wary of adjustable-rate loans, as those interest rates can climb steeply after six months, a year, or some other length of time.

Also, watch out for a lump sum “balloon payment” that you might need to pay at the end of the loan. Not all boat loans come with one, but be sure to read the fine print to see if one is applicable with your financing option.

Financing a New or Used Boat is Possible

If you want to finance a new or used boat, you can probably do it if you have at least decent credit and can afford a down payment. You can apply for financing directly through a boat dealership or go through a different lending entity.

Regardless of the option you choose, make sure you understand the details of the financing agreement. Most buyers opt for a fixed-rate loan, though you might also go for an adjustable one if you feel like it makes sense. Watch out for stipulations that include lump-sum balloon payments at the end of the loan as well.

About Carson Derrow

My name is Carson Derrow I'm an entrepreneur, professional blogger, and marketer from Arkansas. I've been writing for startups and small businesses since 2012. I share the latest business news, tools, resources, and marketing tips to help startups and small businesses to grow their business.